Blue Star — Q4 FY26 earnings call

In Q4FY26, we were clear about it because summer had not set in, summer set in on 13th April only. Therefore, in Q4, in preparation, specifically end of February-March, the spends were very low. This includes also many in-shop promotions like in shop demonstrators, so on and so forth, which we are stepping up post the onset of summer season. There is no intent to stop our investments, which is in the order of around 1.5% into 2% of our products business revenue, that's what is advertising, brand building, field marketing expenses. That will continue depending on the demand.

Clarifies the company's strategy on advertising spend in a competitive market, linking it directly to demand and seasonal factors rather than fixed outlays, and its impact on brand image.

Asked by Natasha Jain

This is a very critical period to judge that. Now the consumer demand will drop. If the summer is active, it's not going to be, as I have told you that, let us say, last year to this year, 13% price increase, but there is a 10% GST benefit. Actually, the consumer is going to pay around 3%. And that's where we are. So, I am not very sure off take will be reduced because of this price increase.

Addresses concerns about demand destruction due to price increases, explaining the net impact on consumers is lower than the headline price hike due to GST benefits, but acknowledges other macro factors could still influence sentiment.

Asked by Sonali Salgaonkar

In MEP of data centers, we do not have any cooling equipment at all. It is all electrical or mechanical equipment. Cooling equipment is bought always separately by a data center provider. In that cooling equipment business, we do not have the complete range. I told you that we estimate the market to be anywhere between 3,000 to 4,000 and our order book will be somewhere around RS.1,500 Crore. Broadly translate in annual revenue of around 1,000, but the inquiry inflow is very huge, very big numbers.

Provides clarity on Blue Star's role in the data center MEP segment (focusing on electrical/mechanical, not cooling equipment) and quantifies their current order book and revenue potential in this high-growth area.

Asked by Pulkit Patni

Sri City is built in the module of.3 lakhs (Units). So, 3 lakh, became 6 lakhs, 6 lakhs became 9 lakhs. This 9 lakhs can become 12 lakhs. Therefore, this capacity is added in line with the market requirement. Today, if we are saying this year, the growth will be good, it will be operating close to 100% capacity. Then we will be deciding by October to expand one more line and the factory is built in such a manner, the building is available. It is an assembly line that we need to invest. What we were to invest last year, we said that we will postpone and look at it in October.

Confirms high utilization of existing RAC manufacturing capacity and outlines a clear timeline for a decision on further expansion, indicating readiness for future market growth.

Asked by Renu Baid

No. I didn't say, FY25 was be somewhere around 15 million only. I think it should be 17.5 million for FY27. I also mentioned FY26 final figure, it should be close to 14.75 million or 14.5 million to 14.75 million because it would have degrown only by around 5% in volume over the previous year. And our market share is 11.25%, like what you said in volume terms and value terms.

Provides specific data points on the overall RAC market size for FY26 (a year of volume de-growth) and Blue Star's current market share in both volume and value terms.

Asked by Achal Lohade

Yes, yes. The inventory adjustment even last year was not that difficult. The problem last year was that it was compounded by one factor after the other factor. You're starting with an assumption there will be shortage of raw material and therefore you have to produce. Then the weather forecast says that weather is going to become hotter by 15th April. April 15th, it says May will become hotter and it will continue like that. Then the next part of it, there is a festival season was completely dampened. Then you got into energy label change, what will happen to old inventory, new inventory. Those are all the issues there. I'm saying inventory management of the industry and Blue Star will be far better this year because if the moment summer has not set in, people have moderated production.

Explains the improved inventory management strategy for the current year, contrasting it with the challenges faced in the previous year due to multiple compounding factors, and highlights the focus on margins over inventory.

Asked by Manish Raj

I don't think we have any concern there. If any, it's all covered for the price variation. Having said that, if you have delayed or the delay is attributable to us, during the delayed period, price variation will not be applicable. I do not think we have any kind of an impact at the moment in terms of input material cost has gone up. See, how it was is that you always assume that price variation will provide for something and there is some contingency that is available and so that is not the major concern there.

Reassures investors about the protection of project business margins against raw material price increases and currency fluctuations through contractual clauses and contingencies.

Asked by Ravi Swaminathan

What I will not very sure is whether it is an industry which, given the number of players, the competition, the increasing competition and increasing investments in manufacturing capacity, whether it will provide that 8% to 9% of operating margin. So, the question will be the margin will be under extreme pressure.

Highlights a key long-term concern for the RAC industry: the sustainability of operating margins (8-9%) amidst intense competition and significant capacity investments, suggesting potential for margin pressure.

Asked by Aniruddha Joshi